TESCO boss Dave Lewis declared its turnaround was “firmly on track” as the supermarket announced its first dividend payout for three years alongside a 27 per cent jump in half-year profit.

Tesco attracted more customers having kept food price rises about 1 per cent lower than rivals

Lewis, who joined the food giant in 2014 as it reeled from an accounting scandal and a string of profit warnings, has now overseen a seventh straight quarter of sales growth.

Shoppers were “voting with their feet” as Tesco attracted 300,000 more customers having kept food price rises about 1 per cent lower than rivals, leading to a 0.4 per cent increase in transactions and 0.3 per cent in volumes.

He added that its 1.5 per cent growth in fresh food sales was a “significant outperformance” against the market.

Tesco has cut multi-buy promotions by 10 per cent to simplify prices as well as focusing on customer service, supplier relationships and streamlining ranges.

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Group operating profit before exceptional items increased to £759million from £596million last time, on 3.3 per cent higher sales of £25.2billion.

Takings at UK stores open at least a year were up 2.2 per cent, while cost savings were £259million and net debt reduced by a quarter to £3.26billion.

Lewis said resuming the dividend reflected “our confidence that we can build on our strong performance and create long-term, sustainable value for all our stakeholders”.

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Tesco has cut multi-buy promotions by 10 per cent to simplify prices

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Dave Lewis said shoppers were ‘voting with their feet’ and heading for Tesco stores

He added: “We’re continuing to make strong progress. Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were three years ago.”

Lewis said its proposed £3.7billion takeover of the cash-and-carry Booker Group was on track.

Competition regulators were due to provide an interim view by the end of this month and a report by the end of the year John Ibbotson, of retail consultancy Retail Vision, said: “It’s back to basics – sticking religiously to delivering a strong food proposition, keeping prices low and improving customer service.”